Hidden value at Urban&Civic

Yet, despite this, the shares have been tarred with the same brush that has swept away values in the broader real estate market. And the shares are more undervalued than a first glance at asset values would suggest. Regulations prohibit the upward valuation of trading properties, which have to be carried on the balance sheet at the lower of cost and net realisable value. Furthermore, wholesale valuations are applied to assets that are sold off in smaller parcels and generate a greater return. As a result, the basic net asset value (NAV) per share of 254p jumps smartly on an adjusted basis to 275.4p, leaving the shares at a 36 per cent discount.

Despite all the uncertainty, housebuilders have been quick to embrace its licence model, with a total of 981 serviced plots sold. Typically, parcels of 150-200 plots are sold, having been levelled and ready for construction, with roads, pavements already in place. Urban&Civic will start its own housebuilding early next year, where cash realisations will be nearer five times book value against two times on licensed deals.

Analysts at Stifel are forecasting adjusted NAV at the September 2017 year-end of 324p a share.